R.O.I. Real State – Residential Newsletter- June 2020
Posted on July 2, 2020
This year’s wild ride is not over yet. From May to June 2020, the supply-demand index reversed course and rose nearly as fast as it fell in April, escalating from 149.3 to 211.1, due to both dropping supply and increasing demand. Stay-home orders starting in March resulted in pent-up supply and demand during what are typically peak months for contract activity. Although R.O.I. Properties believes Phoenix will fare better than most metro areas, several underlying factors may cause significant changes in the market going forward. The most significant unknowns include the expiration of extended unemployment benefits on July 25, the depletion of PPP funds, the extension of mortgage forbearance rules (currently scheduled through the end of 2020), and housing affordability…You can read all the details in the attached R.O.I. Properties “Real State – Residential” newsletter, with additional statistics, market trends and information, but here’s a quick peek at the highlights:
- Active listings: April and May were weak for new listings due to the stay-home orders and pandemic safety measures. June has offered little relief, running 12% lower than last year. Any boost in supply that was fueled by the vacation rental market has now been absorbed; the only price range that saw a surge in new listings was the over $1M market, up 34% over June 2019. As of June 20, there were only 8,901 listings for sale through the Arizona Regional MLS and only 3,644 of those listings were single family homes under $500K. There have been 10,916 single family permits filed so far between January and May this year, up 9.8% from this time last year—but it has not been enough to satisfy the surge of demand. Queen Creek is up 42% in new single-family permits, followed by Buckeye (up 25%) and the Town of Maricopa (up 18%). Multifamily permits are up 36% so far this year, but it’s unclear what percentage of these projects will be apartments vs. units for sale at this time.
- Sales volume & price: May 2020 ended with an average sale price of $180.32/SF through the MLS, up 5.0% from last May and 2.5% lower than April 2020. Greater Phoenix is now experiencing higher than normal demand for this time of year, resulting in a rising level of contract activity during a time that the market would typically be declining. There is no guarantee that will continue, and it’s reasonable to expect some sort of seasonal decline eventually, but we are in unusual times. Contract activity is 18% higher than it was this time last year, and sellers who intend to sell their home this year should consider taking advantage of the surge while it lasts. Contracts over $500K have soared 98% higher than this week last year and recovered 178% since April 5. The luxury market has come roaring back and average price measures will rise as a result.